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Reuters
UPDATE - ChevTex, Exxonmobil win Nigeria-Sao Tome oil block
Saturday April 24, 10:03 am ET


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ABUJA, April 24 (Reuters) - U.S. oil giants ChevronTexaco (NYSE:CVX - News) and ExxonMobil (NYSE:XOM - News) have won rights to drill for oil in the highly sought after block one of Nigeria and Sao Tome's Joint Development Zone in the Gulf of Guinea, the licensing authority said on Saturday.

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The Joint Ministerial Council which takes political responsibility for the JDZ said Chevron which won a 51 percent stake, will operate the block. Exxonmobil has 40 percent, while Norway's Equity Energy Resources has nine percent.

The council said it will announce winners of the seven other blocks in the zone at a future date.

"The JMC will deliberate further on the results of the other blocks and the decisions will be communicated in due course," the council said in a statement after a meeting in the Nigerian capital, Abuja.

The award of the priced block is the highpoint of a six-month licensing process of nine offshore blocks which marks the first steps of the tiny island nation of Sao Tome and Principe into the world of big oil.

ExxonMobil and little-known Environmental Remediation Holdings Corp (OTC BB:ERHC.OB - News) had exercised pre-emptive rights to minority stakes in seven of the nine blocks, which the companies earned by doing preliminary exploration work for Sao Tome prior to the establishment of the joint authority in 2000.

Exxonmobil took 40 percent in block one, while Texas-based ERHC, a subsidiary of Nigeria's privately-owned Chrome Energy, claimed a 30 percent option in block two, the second most sought-after acreage.

The Gulf of Guinea, shared by Nigeria, Cameroon, Equatorial Guinea, Gabon and Sao Tome, has seen a swathe of huge oil discoveries in deep ocean depths over the past decade.

The United States sees the area as a strategic supplement to its oil supplies from the war-torn Middle East.

The nine JDZ blocks are thought to hold some 10 billion barrels of hydrocarbon.

Each bid comprised signature bonuses to be paid up front, production bonuses to be paid after a certain volume of oil has been produced, and community projects planned in Nigeria and Sao Tome.

Revenue from any oil produced from the area will be split 60/40 in favour of Nigeria, according to terms of the bilateral accord.

In October's bidding round, the highest bid was $123 million offered by ChevronTexaco for block one, the second highest was for block two, where Nigerian dredging company Foby Engineering bid $113 million. Foby was also top bidder for block nine.

Sahara Energy was the top bidder for blocks three and five, ECL International lead the pack for block four, Maurel et Prom was top bidder for block six, and Fusion (London:FOG.L - News) was sole bidder for block seven. Block eight attracted no interest.

The two governments had said they would consider technical criteria such as experience in deepwater exploration and production, local content and financial capability of the bidders in selecting winners.